Economic demand and supply

Demand is the quantity of goods and services available in a given market that the buyer is willing to purchase at a certain price, regardless of whether it acts rationally or under the influence of the environment.

The amount of demand is the quantity of goods (services) that buyers are willing to buy at a given price at a certain time and place.

The law of demand - in any market, at any time, with other things being equal, there is a negative relationship between the price of the product and the amount of demand for it.

Demand Factors:

• •    the price of the product

• •    changing consumer tastes

• •    change in the number of customers

• •    change in consumer income

• •    Change in prices for related products

• •    changes in consumer expectations

• •    degree of satisfaction of needs

The offer is the quantity of the given product that the producers can and will sell in the market at the given price. The quantity of the offer is the quantity of the product that will be offered for sale at a given price in a specific time interval. The law of supply - in any market, at any given time, other things being equal, there is a positive relationship between the price of the product and the value of its supply.

Supply factors:

• •    the price of the product

• •    change in prices for resources

• •    technology change

• •    changes in taxes and subsidies

• •    changes in prices for other goods

• •    change in the number of producers

Equilibrium is the situation on the market when supply and demand coincide or are equivalent at a price acceptable to the consumer and producer. A market equilibrium arises from the interaction of demand and supply. The equilibrium price is the price balancing supply and demand as a result of the action of specific forces. If the real the price will be more than equilibrium, then at such a price, the volume of demand will be less than the volume of supply. In this case, manufacturers will prefer to reduce the price, than continue to produce products in volume, significantly increasing the volume of demand. The excess supply will exert downward pressure on the price. If the real price in the market is below equilibrium, then the demand volume will be greater than the supply volume and the commodity will become scarce. Balance is the law of a competitive market. Thanks to the balance in every market, the balance of the economic system as a whole is maintained. Properties of the equilibrium price and equilibrium quantity: 1. The goods are presented on the market no more and no less than what is needed for human consumption. All costs of producing goods are paid off by selling them at an equilibrium price. At the point of equilibrium, the greatest social effect is also expressed. For the equilibrium price, the consumer acquires the marginal (for his income) the number of utilities3. In the market there is no excess of goods (quantities that are unnecessary for sale for a given volume of income of the population) nor a shortage of shortages) of benefits.

Used sources:

• 1.    Староверова Г.С. Экономическая оценка инвестиций. Учебное пособие. – М.: КНОРУС, 2010. – 312 с.

• 2.    Гуськова Н.Д. Инвестиционный менеджмент. Учебник. – М.: КНОРУС, 2010. – 456 с.

• 3.    Шарп У., Александер Г., Бейли Дж. Инвестиции: Пер. с англ. - М. ИНФРА-М, 2007. 1028 с.